Old Line Bancshares, Inc. Reports $3.1 Million in Net Income Available to Common Stockholders, a 78% Increase, for the Quarter Ended September 30, 2015

Published on October 15, 2015

BOWIE, Md., Oct. 15, 2015 (GLOBE NEWSWIRE) — Old Line Bancshares, Inc. (NASDAQ:OLBK), the parent company of Old Line Bank, reported net income available to common stockholders increased $1.4 million, or 78.38% to $3.1 million for the three months ended September 30, 2015, compared to net income of $1.7 million for the three months ended September 30, 2014. Earnings were $0.30 per basic and $0.29 per diluted common share for the three months ended September 30, 2015, compared to $0.16 per basic and diluted common share for the same period in 2014. The increase in net income is primarily the result of a $1.6 million increase in net interest income, a $292 thousand decrease in the provision for loan losses and a $582 thousand increase in non-interest income, partially offset by a $122 thousand increase in non-interest expenses. Net income was $8.4 million for the nine months ended September 30, 2015, compared with $5.3 million for the same nine month period last year, an increase of $3.1 million, or 58.27%. Earnings were $0.80 per basic and $0.78 per diluted common share for the nine months ended September 30, 2015 compared to $0.50 per basic share and $0.49 per diluted common share for the same period last year. The increase in net income is primarily the result of increases of $3.2 million in net interest income and $615 thousand in non-interest income and a decrease of $1.5 million in the provision for loan losses offsetting an increase of $57 thousand in non-interest expenses. The current year decrease in the provision for loan losses is primarily attributable to one large commercial credit that was sold at foreclosure.

Total assets at September 30, 2015 increased by $103.9 million compared to December 31, 2014. Total net loans held-for-investment increased $31.2 million, or 3.10%, during the three month period ended September 30, 2015 and $113.3 million, or 12.23%, during the nine month period ended September 30, 2015. Non-performing assets decreased to 0.36% of total assets at September 30, 2015 compared to 0.65% at December 31, 2014.

James W. Cornelsen, President and Chief Executive Officer of Old Line Bancshares, Inc. stated: “We are pleased to report strong earnings for the third quarter and nine months ending September 30, 2015. We continue to concentrate on building our loan and deposit portfolios while maintaining our asset quality. We had loan growth of 3.10% for the quarter and a strong growth of 12.23% for the nine months ending September 30, 2015. Our deposits grew 0.57% and 7.37% for the three and nine month periods ending September 30, 2015 to $1.1 billion at September 30, 2015 from $1.0 billion at December 31, 2014.”

Mr. Cornelsen also noted that on August 5, 2015, Old Line Bancshares entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Regal Bancorp, Inc. (“Regal”), the parent company of Regal Bank & Trust, headquartered in Owings Mills, Maryland (“Regal Bank”). We are awaiting regulatory and Regal stockholder approval for the merger to proceed. We believe this a good opportunity to expand our footprint and develop new loan and deposit relationships. We are extremely pleased to be joining with Regal Bancorp, an organization that shares our community banking vision, and believe the acquisition is a great opportunity to generate increased earnings and to increase returns for the stockholders of both entities, and to enter new markets in Baltimore and Carroll Counties.

HIGHLIGHTS:

Net loans held-for-investment increased $31.2 million, or 3.10%, and $113.3 million, or 12.23%, for the three and nine months ended September 30, 2015, to $1.0 billion at September 30, 2015 compared to $926.6 million at December 31, 2014, as a result of organic growth within our surrounding market area.

Total assets increased $103.9 million, or 8.46%, since December 31, 2014.

Non-performing assets decreased to 0.36% of total assets at September 30, 2015 compared to 0.65% at December 31, 2014 and 0.70% at September 30, 2014.

The net interest margin during the three months ended September 30, 2015 was 4.07% compared to 3.97% for the same period in 2014. Total yield on interest earning assets increased to 4.49% for the three months ending September 30, 2015, compared to 4.33% for the same three month period last year. Interest expense as a percentage of total interest-bearing liabilities was 0.55% for the three months ended September 30, 2015 compared to 0.47% for the same three month period of 2014.

The net interest margin for the nine months ended September 30, 2015 was 3.97% compared to 4.03% for the same nine month period in 2014. Total yield on interest earning assets increased to 4.37% for the nine months ending September 30, 2015, compared to 4.42% for the same nine month period last year. Interest expense as a percentage of total interest-bearing liabilities increased to 0.53% for the nine months ended September 30, 2015 compared to 0.49% for the same nine month period of 2014.

The third quarter Return on Average Assets (ROAA) and Return on Average Equity (ROAE) were 0.93% and 8.87%, respectively, compared to ROAA and ROAE of 0.57% and 5.22%, respectively, for the third quarter of 2014.

The ROAA and ROAE were 0.87% and 8.19%, respectively, for the nine months ended September 30, 2015 compared to ROAA and ROAE of 0.60% and 5.53%, respectively, for the nine months ending September 30, 2014.

Total deposits grew by $74.8 million, or 7.37%, since December 31, 2014.

We ended the third quarter of 2015 with a book value of $13.13 per common share and a tangible book value of $12.02 per common share compared to $12.51 and $11.38, respectively, at December 31, 2014.

We maintained liquidity and by all regulatory measures remained “well capitalized.”

On August 5, 2015, Old Line Bancshares entered into Merger Agreement with Regal, which provides for the merger of Regal with and into Old Line Bancshares, with Old Line Bancshares continuing as the surviving entity (the “Merger”). Immediately following the consummation of the Merger, Regal Bank, a trust company with commercial banking powers chartered under the laws of the State of Maryland, will merge with and into Old Line Bank, with Old Line Bank continuing as the surviving bank. The Merger Agreement was approved by the Board of Directors of each of Old Line Bancshares and Regal, and the Regal’s stockholders are scheduled to vote on approval of the Merger Agreement and the Merger on November 20.

On February 25, 2015, Old Line Bancshares, Inc.’s board of directors approved the repurchase of up to 500,000 shares of our outstanding common stock. As of September 30, 2015, 339,237 shares have been repurchased at an average price of $15.73 per share. Any repurchased shares become authorized but unissued shares.

Total assets at September 30, 2015 increased $103.9 million from December 31, 2014 primarily due to an increase of $113.3 million in loans held-for-investment and $5.2 million in cash and cash equivalents, offsetting a decrease of $10.2 million in our investment portfolio.

Nonperforming assets, which include non-accrual loans, foreclosed real estate and troubled debt restructured loans, decreased 29 basis points from 0.65% of total assets at December 31, 2014 to 0.36% of total assets at September 30, 2015.

Deposit growth for the nine months ended September 30, 2015 consisted of increases in interest bearing deposits of $56.4 million and non-interest bearing deposits of $18.4 million.

The increase in net income for the three months ending September 30, 2015 compared to the three months ending September 30, 2014, as noted above, was primarily the result of a $1.6 million, or 15.69%, increase in net interest income, a $292 thousand, or 52.52%, decrease in the provision for loan losses and an increase of $582 thousand, or 46.04% in non-interest income, partially offset by a $122 thousand increase in non-interest expenses. The increase in net income for the nine months ending September 30, 2015 compared to the nine months ending September 30, 2014, as noted above, was primarily the result of a $3.2 million, or 10.33%, increase in net interest income, a $1.5 million decrease in the provision for loan losses and a $615 thousand, or 13.48%, increase in non-interest income, offsetting an increase of $57 thousand in non-interest expenses.

Average interest bearing liabilities for the three month period ending September 30, 2015 increased $86.1 million compared to the same period of 2014. Average interest bearing liabilities for the nine month period ending September 30, 2015 increased $67.3 million compared to the same period of 2014. The average rate paid on such liabilities increased to 0.55% and 0.53%, respectively, for the three and nine months ending September 30, 2015 compared to 0.47% and 0.49% for the comparable 2014 periods.

Net interest margin for the three months ended September 30, 2015 increased to 4.07% from 3.97% during the three months ending September 30, 2014. The net interest margin for the nine months ended September 30, 2015 decreased to 3.97% from 4.03% during the nine months ending September 30, 2014. The net effect of fair value accretion/amortization on acquired loans also affects the net interest margin and net interest income. The fair value accretion/amortization is recorded on pay downs during the period recognized. Payoffs increased during the three months ending September 30, 2015 contributing an 18 basis point increase, as compared to a negative impact of nine basis points for the three months ending September 30, 2014. The fair value accretion recorded on acquired deposits affects interest expense. The amount of the accretion on such deposits during the three months ended September 30, 2015 decreased by four basis points as compared to the same three month period last year.

Net interest income increased for the three and nine month periods ending September 30, 2015 compared to the same periods in 2014 primarily due to increases in the interest recognized on loans offsetting the increases in interest expense. Loan interest income increased for the three and nine month periods ending September 30, 2015 primarily due to organic growth in our loan portfolio. Interest expense increased due to increases in both our borrowings and the rate on such borrowings. Our average interest bearing deposits and average rates paid on these deposits increased for both the three and nine month period ending September 30, 2015.

The provision for loan losses decreased for the three and nine month periods ending September 30, 2015 compared to the same periods last year. The decrease for the three month period is the result of our continued improvements in asset quality. The decrease for the nine month period is the result of a provision for $1.4 million that was recognized during the second quarter last year for one commercial loan that was sold at foreclosure during the third quarter of last year, in addition to continued improvements in asset quality, as noted above.

Non-interest income increased for the three month period ending September 30, 2015 compared to the same period of 2014 primarily as a result of increases of $291 thousand in other fees and commissions and $328 thousand on earnings on marketable loans, offsetting the decrease of $42 thousand in service charges on deposit accounts. Other fees and commissions increased primarily due to a gain of $153 thousand received during the third quarter of 2015 as a result of selling our credit card portfolio. The increase in earnings on marketable loans is due to the gains recorded on the sale of $23.4 million in residential mortgage loans sold in the secondary market during the three months ending September 30, 2015 as compared to $16.2 Million in the 2014 period. Service charges on deposit accounts decreased as a result of lower overdraft and ATM fees compared to the same three month period last year. Non-interest income also increased for the nine month period ending September 30, 2015 compared to the same nine months last year. The increase is primarily the result of a $1.0 million increase in earnings on marketable loans, offsetting decreases of $123 thousand in other fees and commissions and $130 thousand in service charges on deposit accounts. The increase in earnings on marketable loans for the nine months ending September 30, 2014 is due to the gains recorded on the sale of $78.0 million in residential mortgage loans sold in the secondary market compared to sales of $36.3 million for the same nine month period last year.

Non-interest expenses increased $122 thousand for the three month period ending September 30, 2015 compared to the same period of 2014 primarily as a result of a decrease in the gain the sale of other real estate owned and an increase in occupancy expense, partially offset by a decrease in salaries and benefits. Earnings on the sale of other real estate owned decreased during the three month period ending September 30, 2015 with gains of $115 thousand on an acquired property that was previously charged off compared to gains of $261 thousand on the sale of four properties for the same three month period last year. Occupancy and equipment expenses increased as a result of additional space at our Rockville location and additional space occupied by Old Line Bank at the Pointer Ridge location for our support staff. Salaries and benefits decreased approximately $152 thousand due to lower costs associated with loan origination fees for the 2015 period compared to the same period last year.

Non-interest expenses increased $57 thousand for the nine month period ending September 30, 2015 compared to the same nine month period last year. Salaries and benefits decreased due to severance payments in the 2014 period that were associated with merger related staffing reductions. Occupancy and equipment expenses decreased for the nine month period as a result of the closure of four of our branches on December 31, 2014. Losses on the sale of four other real estate owned properties during the nine months ended September 30, 2015 resulted in a net loss of $29 thousand compared to a net gain of $543 thousand on the sale of nine properties for the comparable nine month period last year. Other operating expenses increased $271 thousand primarily as a result of increase in our marketing and advertising due to an enhanced ongoing marketing campaign during the 2015 period. Data processing costs increased due to enhancements in our data processing environment.

Old Line Bancshares, Inc. is the parent company of Old Line Bank, a Maryland chartered commercial bank headquartered in Bowie, Maryland, approximately 10 miles east of Andrews Air Force Base and 20 miles east of Washington, D.C. Old Line Bank has 19 branches located in its primary market area of suburban Maryland (Washington, D.C. suburbs and Southern Maryland) counties of Anne Arundel, Calvert, Charles, Prince George’s and St. Mary’s. It also targets customers throughout the greater Washington, D.C. metropolitan area. In connection with the Merger, Old Line Bancshares has filed with the Securities and Exchange Commission (the “SEC”) a registration statement on Form S-4 to register the shares of Old Line Bancshares common stock to be issued to the stockholders of Regal. The registration statement includes a proxy statement/prospectus that will be sent to the stockholders of Regal seeking their approval of the Merger. In addition, Old Line Bancshares may file other relevant documents concerning the Merger with the SEC.

Stockholders of Regal are urged to read the registration statement on Form S-4 and the proxy statement/prospectus included within the registration statement and any other relevant documents to be filed with the SEC in connection with the Merger because they contain and will contain important information about Old Line Bancshares and the Merger. Stockholders of Regal may obtain free copies of these documents through the website maintained by the SEC at http://www.sec.gov or by accessing Old Line Bancshares’ website at http://www.oldlinebank.com under “Investor Relations – SEC Filings.” The information on these websites is not, and shall not be deemed to be, a part of this release or incorporated into other filings that Old Line Bancshares makes with the SEC. Free copies of the proxy statement/prospectus also may be obtained by directing a request by telephone or mail to Regal Bancorp, Inc., 11436 Cronhill Drive, Owings Mills, Maryland 21117, Attention: G. Bradley Sanner (telephone: (443) 334-4700).

Regal and its directors, executive officers and certain members of management may be deemed to be participants in the solicitation of proxies from the stockholders of Regal in connection with the Merger. Information regarding the interests of these participants and other persons who may, under the rules of the SEC, be deemed participants in the solicitation of proxies with respect to the Merger is set forth in the proxy statement/prospectus as filed with the SEC.

The statement in this press release regarding the anticipated impact of the merger on Old Line Bancshares and the opportunity to generate increased earnings and returns for stockholders of both entities constitutes a “forward-looking statement” as defined by Federal securities laws. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Actual results could differ materially from those currently anticipated due to a number of factors, including, but not limited to: (1) the businesses of Regal may not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; (2) expected revenue synergies and cost savings from the Merger may not be fully realized or realized within the expected timeframe; (3) revenues following the Merger may be lower than expected; (4) customer and employee relationships and business operations may be disrupted by the Merger; (5) the ability to obtain required regulatory and stockholder approvals; (6) the ability to complete the Merger on the expected timeframe may be more difficult, time-consuming or costly than expected; (7) deterioration in economic conditions or a slower than anticipated recovery in our target markets or nationally; (8) continued increases in the unemployment rate in our target markets changes in interest rates; (9) changes in laws, regulations, policies and guidelines impacting our ability to collect on outstanding loans or otherwise negatively impact our business; (10) deterioration in economic conditions or a slowdown in the recovery in our target markets or nationally; (11) sustained high levels of or increases in the unemployment rate in our target markets; (11) the actions of our competitors and our ability to successfully compete, in particular in new market areas; (12) changes in laws impacting our ability to collect on outstanding loans or otherwise negatively impact our business, including regulations implemented pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act enacted in July 2010, and (13) other risk factors detailed from time to time in filings made by Old Line Bancshares with the SEC. Forward-looking statements speak only as of the date they are made. Old Line Bancshares, Inc. will not update forward-looking statements to reflect factual assumptions, circumstances or events that have changed after a forward-looking statement was made. For further information regarding risks and uncertainties that could affect forward-looking statements Old Line Bancshares, Inc. may make, please refer to the filings made by Old Line Bancshares, Inc. with the U.S. Securities and Exchange Commission available at www.sec.gov.

Old Line Bancshares, Inc. & Subsidiaries

Consolidated Balance Sheets

September 30,
2015

June 30,
2015

March 31,
2015

December 31,
2014 (1)

September 30,
2014

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Cash and due from banks

$ 29,107,355

$ 40,494,305

$ 37,061,793

$ 23,572,613

$ 42,266,194

Interest bearing accounts

1,147,181

1,034,085

1,080,570

1,230,864

30,396

Federal funds sold

362,726

331,178

624,888

601,259

533,612

Total cash and cash equivalents

30,617,262

41,859,568

38,767,251

25,404,736

42,830,202

Investment securities available for sale

151,522,391

151,179,573

158,380,719

161,680,198

163,535,833

Loans held for sale

5,624,444

6,361,652

8,692,297

4,548,106

5,735,282

Loans held for investment, less allowance for loan losses of $4,453,714 and $4,281,835 for September 30, 2015 and December 31, 2014.

1,039,867,945

1,008,618,046

963,706,538

926,573,488

883,905,233

Equity securities at cost

3,671,895

3,565,596

3,353,096

5,811,697

4,304,197

Premises and equipment

33,948,846

33,786,623

33,874,131

34,300,375

34,366,258

Accrued interest receivable

3,223,748

3,341,570

3,172,615

3,218,428

3,002,457

Deferred income taxes

12,734,261

13,108,799

12,506,347

16,106,498

19,843,857

Current income taxes receivable

—

1,198,299

1,312,872

—

—

Bank owned life insurance

32,071,875

31,856,947

31,643,001

31,429,747

31,214,396

Other real estate owned

1,948,625

1,215,690

1,600,015

2,451,920

2,699,846

Goodwill

7,793,665

7,793,665

7,793,665

7,793,665

7,793,665

Core deposit intangible

3,822,953

4,016,913

4,210,679

4,420,796

4,633,766

Other assets

4,530,443

4,127,881

6,087,688

3,779,350

4,128,206

Total assets

$ 1,331,378,353

$ 1,312,030,822

$ 1,275,100,914

$ 1,227,519,004

$ 1,207,993,198

Deposits

Non-interest bearing

$ 279,339,255

$ 275,953,182

$ 269,733,047

$ 260,913,521

$ 247,291,192

Interest bearing

811,186,492

808,460,674

781,718,574

754,825,885

772,344,384

Total deposits

1,090,525,747

1,084,413,856

1,051,451,621

1,015,739,406

1,019,635,576

Short term borrowings

85,695,507

76,722,442

71,236,281

61,002,889

35,558,734

Long term borrowings

5,903,665

5,931,298

5,958,485

5,987,283

6,017,844

Accrued interest payable

357,691

322,926

284,444

266,023

241,740

Supplemental executive retirement plan

5,276,167

5,222,669

5,162,732

5,095,141

5,069,745

Income taxes payable

379,247

—

—

485,435

3,406,234

Other liabilities

4,967,326

3,457,441

3,420,900

3,416,190

4,557,087

Total liabilities

1,193,105,350

1,176,070,632

1,137,514,463

1,091,992,367

1,074,486,960

Stockholders’ equity

Common stock

105,131

105,745

107,551

108,110

107,864

Additional paid-in capital

100,614,804

101,500,434

104,313,092

105,235,646

104,900,904

Retained earnings

36,935,945

34,353,501

32,281,404

30,067,798

28,826,765

Accumulated other comprehensive income (loss)

359,840

(253,879)

630,791

(147,250)

(589,650)

Total Old Line Bancshares, Inc. stockholders’ equity

138,015,720

135,705,801

137,332,838

135,264,304

133,245,883

Non-controlling interest

257,283

254,389

253,613

262,333

260,355

Total stockholders’ equity

138,273,003

135,960,190

137,586,451

135,526,637

133,506,238

Total liabilities and stockholders’ equity

$ 1,331,378,353

$ 1,312,030,822

$ 1,275,100,914

$ 1,227,519,004

$ 1,207,993,198

Shares of basic common stock outstanding

10,513,025

10,574,439

10,755,017

10,810,930

10,786,370

(1) Financial information at December 31, 2014 has been derived from audited financial statements.

Old Line Bancshares, Inc. & Subsidiaries

Consolidated Statements of Income

Three Months
Ended
September 30,

Three Months
Ended
June 30,

Three Months
Ended
March 31,

Three Months
Ended
December 31,

Three Months
Ended
September 30,

Nine Months
Ended
September 30,

Nine Months
Ended
September 30,

2015

2015

2015

2014 (1)

2014

2015

2014

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Interest income

Loans, including fees

$ 12,202,174

$ 11,500,630

$ 11,599,390

$ 10,556,729

$ 10,232,684

$ 35,302,194

$ 31,166,655

Investment securities and other

805,172

835,594

886,084

939,602

885,324

2,526,850

2,940,261

Total interest income

13,007,346

12,336,224

12,485,474

11,496,331

11,118,008

37,829,044

34,106,916

Interest expense

Deposits

1,118,092

1,021,560

910,957

799,716

850,964

3,050,609

2,601,906

Borrowed funds

141,009

159,707

134,716

119,214

111,693

435,432

378,887

Total interest expense

1,259,101

1,181,267

1,045,673

918,930

962,657

3,486,041

2,980,793

Net interest income

11,748,245

11,154,957

11,439,801

10,577,401

10,155,351

34,343,003

31,126,123

Provision for loan losses

263,595

85,658

561,731

458,114

555,134

910,984

2,369,183

Net interest income after provision for loan losses

11,484,650

11,069,299

10,878,070

10,119,287

9,600,217

33,432,019

28,756,940

Non-interest income

Service charges on deposit accounts

442,225

441,382

415,202

475,120

483,865

1,298,809

1,428,943

Gain on sales or calls of investment securities

604

3,924

60,694

—

—

65,222

129,911

Gain on sale of stock

—

—

—

—

—

—

96,993

Earnings on bank owned life insurance

250,950

249,421

248,384

249,967

248,259

748,755

738,237

Gains (losses) on disposal of assets

—

—

19,975

(48,051)

—

19,975

17,919

Earnings on marketable loans

457,613

500,865

585,984

290,269

129,498

1,544,462

527,478

Other fees and commissions

692,106

325,028

485,299

395,953

400,713

1,502,433

1,625,314

Total non-interest income

1,843,498

1,520,620

1,815,538

1,363,258

1,262,335

5,179,656

4,564,795

Non-interest expense

Salaries & employee benefits

4,407,726

4,331,572

4,178,896

4,274,962

4,559,711

12,918,194

13,527,562

Occupancy & Equipment

1,478,740

1,338,660

1,399,877

1,878,052

1,367,808

4,217,277

4,390,541

Data processing

350,941

367,190

352,060

352,956

368,717

1,070,191

987,919

Merger and integration

—

—

—

—

—

—

29,167

Core deposit amortization

193,960

193,766

210,117

212,970

212,970

597,843

653,734

(Gains) losses on sales of other real estate owned

(114,709)

9,169

134,754

(155,148)

(260,533)

29,214

(542,728)

OREO expense

158,983

75,552

120,201

199,094

159,238

354,736

354,963

Other operating

2,132,067

2,477,041

2,257,235

2,257,866

2,078,155

6,866,343

6,595,558

Total non-interest expense

8,607,708

8,792,950

8,653,140

9,020,752

8,486,066

26,053,798

25,996,716

Income before income taxes

4,720,440

3,796,969

4,040,468

2,461,793

2,376,486

12,557,877

7,325,019

Income tax expense

1,605,586

1,195,273

1,295,035

679,154

636,239

4,095,894

2,014,950

Net income

3,114,854

2,601,696

2,745,433

1,782,639

1,740,247

8,461,983

5,310,069

Less: Net income (loss) attributable to the noncontrolling interest

2,894

776

(8,720)

1,978

(4,299)

(5,050)

(39,568)

Net income available to common stockholders

$ 3,111,960

$ 2,600,920

$ 2,754,153

$ 1,780,661

$ 1,744,546

$ 8,467,033

$ 5,349,637

Earnings per basic share

$ 0.30

$ 0.25

$ 0.25

$ 0.17

$ 0.16

$ 0.80

$ 0.50

Earnings per diluted share

$ 0.29

$ 0.24

$ 0.25

$ 0.16

$ 0.16

$ 0.78

$ 0.49

Dividend per common share

$ 0.05

$ 0.05

$ 0.05

$ 0.05

$ 0.05

$ 0.15

$ 0.13

Average number of basic shares

10,544,357

10,617,225

10,807,366

10,792,544

10,785,881

10,655,375

10,783,818

Average number of dilutive shares

10,685,306

10,759,628

10,899,030

10,941,002

10,921,555

10,792,821

10,937,720

(1) Financial information at December 31, 2014 has been derived from audited financial statements.

Old Line Bancshares, Inc. & Subsidiaries

Average Balances, Interest and Yields

9/30/2015

6/30/2015

3/31/2015

12/31/2014

9/30/2014

Average
Balance

Yield

Average
Balance

Yield

Average
Balance

Yield

Average
Balance

Yield

Average
Balance

Yield

Assets:

Int. Bearing Deposits

$ 1,754,437

0.05%

$ 914,076

0.08%

$ 593,602

0.12%

$ 2,902,672

0.20%

$ 3,896,273

0.17%

Investment Securities (2)

154,931,599

2.56%

161,858,721

2.56%

164,560,281

2.70%

168,069,134

2.40%

159,259,044

2.94%

Loans

1,036,066,492

4.76%

1,002,896,056

4.70%

954,873,037

5.02%

905,241,954

4.78%

897,381,372

4.57%

Allowance for Loan Losses

(4,567,326)

(4,576,511)

(4,498,086)

(2,570,097)

(6,422,492)

Total Loans Net of allowance

1,031,499,166

4.78%

998,319,545

4.72%

950,374,951

5.04%

902,671,857

4.79%

890,958,880

4.60%

Total interest-earning assets

1,188,185,202

4.49%

1,161,092,342

4.42%

1,115,528,834

4.70%

1,073,643,663

4.42%

1,054,114,197

4.33%

Noninterest bearing cash

39,141,171

37,463,216

34,422,919

38,925,730

42,071,667

Other Assets

99,737,905

99,548,767

102,782,917

107,033,944

109,199,887

Total Assets

$ 1,327,064,278

$ 1,298,104,325

$ 1,252,734,670

$ 1,219,603,337

$ 1,205,385,751

Liabilities and Stockholders’ Equity

Interest-bearing Deposits

$ 813,731,631

0.55%

$ 765,327,795

0.54%

$ 772,838,785

0.48%

$ 767,241,928

0.41%

$ 776,032,831

0.44%

Borrowed Funds

87,448,890

0.64%

117,595,112

0.54%

72,721,100

0.75%

50,442,530

0.94%

39,031,131

1.14%

Total interest-bearing liabilities

901,180,521

0.55%

882,922,907

0.54%

845,559,885

0.50%

817,684,458

0.45%

815,063,962

0.47%

Noninterest bearing deposits

278,650,167

269,427,296

262,926,103

255,002,560

247,346,466

1,179,830,688

1,152,350,203

1,108,485,988

1,072,687,018

1,062,410,428

Other Liabilities

8,422,924

7,866,395

9,009,800

11,057,397

10,072,582

Noncontrolling Interest

256,636

252,293

258,240

261,545

262,435

Stockholder’s Equity

138,554,030

137,635,434

134,980,642

135,597,377

132,640,306

Total Liabilities and Stockholder’s Equity

$ 1,327,064,278

$ 1,298,104,325

$ 1,252,734,670

$ 1,219,603,337

$ 1,205,385,751

Net interest spread

3.93%

3.88%

4.20%

3.97%

3.86%

Net interest income and Net interest margin(1)

$ 12,184,339

4.07%

$ 11,602,656

4.01%

$ 11,891,497

4.32%

$ 11,034,119

4.08%

$ 10,545,444

3.97%

(1) Interest revenue is presented on a fully taxable equivalent (FTE) basis. The FTE basis adjusts for the tax favored status of these types of assets. Management believes providing this information on a FTE basis provides investors with a more accurate picture of our net interest spread and net interest income and we believe it to be the preferred industry measurement of these calculations. See “Reconciliation of Non-GAAP Measures.”

(2) Available for sale investment securities are presented at amortized cost.

The accretion of the fair value adjustments resulted in a positive impact in the yield on loans for the three months ending September 30, 2015 compared to a negative impact for the three month period ending September 30, 2014. Fair value accretion for the current quarter and prior four quarter are as follows:

9/30/2015

6/30/2015

3/31/2015

12/31/2014

9/30/2014

Fair Value
Accretion
Dollars

% Impact on
Net Interest
Margin

Fair Value
Accretion
Dollars

% Impact on
Net Interest
Margin

Fair Value
Accretion
Dollars

% Impact on
Net Interest
Margin

Fair Value
Accretion
Dollars

% Impact on
Net Interest
Margin

Fair Value
Accretion
Dollars

% Impact on
Net Interest
Margin

Commercial loans (1)

$ 18,940

0.01%

$ (3,114)

(0.00)%

$ 8,690

0.00%

$ (969)

(0.00)%

$ (16,219)

(0.01)%

Mortgage loans (1)

514,073

0.17

35,386

0.01

589,266

0.21

24,779

0.01

(278,619)

(0.10)

Consumer loans

3,771

0.00

4,298

0.00

11,390

0.00

6,686

0.00

4,209

0.00

Interest bearing deposits

38,091

0.01

37,677

0.01

37,263

0.01

110,503

0.04

131,837

0.05

Total Fair Value Accretion (Amortization)

$ 574,875

0.19%

$ 74,247

0.02%

$ 646,609

0.22%

$ 140,999

0.05%

$ (158,792)

(0.06)%

(1) Negative accretion on commercial and mortgage loans is due to the early payoff of loans which caused a reduction in fair value income on acquired loan portfolio.

Below is a reconciliation of the fully tax equivalent adjustments and the GAAP basis information presented in this report:

9/30/2015

6/30/2015

3/31/2015

12/31/2014

9/30/2014

Net Interest
Income

Yield

Net Interest
Income

Yield

Net Interest
Income

Yield

Net Interest
Income

Yield

Net Interest
Income

Yield

GAAP net interest income

$ 11,748,245

3.93%

$ 11,171,187

3.86%

$ 11,461,904

4.17%

$ 10,577,401

3.91%

$ 10,155,351

3.82%

Tax equivalent adjustment

Federal funds sold

—

—

1

0.00

1

0.00

1

0.00

—

—

Investment securities

193,491

0.06

195,785

0.07

200,498

0.07

343,280

0.13

294,770

0.11

Loans

242,602

0.08

235,683

0.08

229,094

0.08

113,437

0.04

95,323

0.04

Total tax equivalent adjustment

436,093

0.14

431,469

0.15

429,593

0.15

456,718

0.17

390,093

0.15

Tax equivalent interest yield

$ 12,184,338

4.07%

$ 11,602,656

4.01%

$ 11,891,497

4.32%

$ 11,034,119

4.08%

$ 10,545,444

3.97%

Old Line Bancshares, Inc. & Subsidiaries

Selected Loan Information

(Dollars in thousands)

September 30,
2015

June 30,
2015

March 31,
2015

December 31,
2014

September 30,
2014

Acquired Loans(1)

Period End Loan Balance

$ 152,004

$ 164,300

$ 171,527

$ 173,659

$ 186,896

Deferred Costs

—

—

—

10

9

Accruing

150,702

161,495

165,956

167,704

183,094

Non-accrual(2)

1,302

2,546

2,518

1,958

1,291

Accruing 30-89 days past due

603

2,102

3,053

3,687

1,569

Accruing 90 or more days past due

214

—

—

310

942

Other real estate owned

1,524

741

1,125

1,977

2,225

Net charge offs (recoveries)

225

320

(16)

52

316

Legacy Loans(3)

Period End Loan Balance

$ 891,407

$ 847,499

$ 795,532

$ 749,968

$ 699,833

Deferred Costs

1,270

1,255

1,283

1,283

1,048

Accruing

889,364

845,391

793,576

746,376

692,854

Non-accrual

773

853

1,105

3,249

3,263

Accruing 30-89 days past due

2,630

1,199

851

343

3,411

Accruing 90 or more days past due

203

—

—

—

305

Other real estate owned

425

475

475

475

475

Net charge offs (recoveries)

20

(34)

224

(4)

2,691

Allowance for loan losses as % of held for investment loans

0.43%

0.44%

0.48%

0.46%

0.44%

Allowance for loan losses as % of legacy held for investment loans

0.50%

0.52%

0.59%

0.57%

0.55%

Allowance for loan losses as % of acquired held for investment loans

2.93%

2.70%

2.60%

2.38%

2.07%

Total non-performing loans as a % of held for investment loans

0.46%

0.49%

0.37%

0.56%

0.96%

Total non-performing assets as a % of total assets

0.36%

0.38%

0.44%

0.65%

0.70%

(1)Acquired loans represent all loans acquired on April 1, 2011 from MB&T and on May 10, 2013 from WSB. We originally recorded these loans at fair value upon acquisition.

(2)These loans are loans that are considered non-accrual because they are not paying in conformance with the original contractual agreement. At acquisition, we recorded these loans at fair value. Until the December 31, 2013 quarter, we recognized interest income on these loans through the accretion of the difference between the carrying value of these loans and their expected cash flows. In the fourth quarter of 2013, we are no longer recording interest on these loans that were not purchased as credit impaired.

(3)Legacy loans represent total loans excluding loans acquired on April 1, 2011 and May 10, 2013.